Internal Asset Market Management And Operations Research

In the Eleventh Five-Year Plan period, our country maintained steady and rapid economic development and fulfilled the major objectives and tasks of the Eleventh Five-Year Plan, and the economy scaled new heights.Stepping into Twelfth Five-Year Plan period, industrialization, informationization. urbanization, marketization and internationalization are all intensifying. The pace of economic development tansformating and restructuring increased noticeably, the key to which is to guide the capital flows properly and make the capital flow in favorite of the tansformating and restructuring. This is so called’"the rational allocation of capital"In economic process, the allocation of funds is to go through two stages:first, the capital flows from its owners to corporates; second, corporates allocate these funds to the appropriate investment projects. The first process is completed by the external capital markets:the second process mainly through the internal capital market. At present. China’s scholars and politicians focus on the function of external capital markets, and pay inadequate attention and study on the allocation process of the internal capital market. However, in the context of transformation of economic development mode and restructuring, research on the internal capital market is extremely necessary.The new institutional economics being as the theoretical basis, the paper reviewed numbers of existing research literature. Based on these, the paper gave basic theoretical analysis on the internal capital market, including the main features, advantages, governance characteristics and dilemmas of the internal capital market. On the basis of theoretical analysis, the paper took Jidong Group as an example to analyze the governance characteristics, operation and governance dilemmas of the internal capital market. According to the problems exposed in the case, this paper put forward some recommendations to improve the efficiency of the internal capital market in China:to control the opportunistic behavior of large shareholders and internal controller effectively, to control and balance the large shareholders’ rights, to improve the information disclosure system, to improve the bad debt provisioning requirements and to improve the efficiency of external capital market.